UK PMI Services dropped to 50.1 in January, down from 51.2 and missed expectation of 51.1. That’s the lowest level for two-and-a-half year and the second-weakest since December 2012. Markit also noted that business activity stagnates amid modest drop in new
work. Staffing levels decline for the first time since December 2012. And, strong input cost inflation persists at start of 2019.
Chris Williamson, Chief Business Economist at IHS Markit, which compiles the survey:
“The latest PMI survey results indicate that the UK economy is at risk of stalling or worse as escalating Brexit uncertainty coincides with a wider slower slowdown in the global economy.
“Service sector growth ground almost to a halt in January, matching similar disappointing news in the manufacturing and construction sectors. The last three months have seen the economy slip into its weakest growth spell for six years, and indicate that GDP likely stagnated at the start of 2019 after eking out modest growth of just 0.1% in the fourth quarter.
“With the exception of July 2016, when demand contracted briefly following the surprise Brexit vote, service providers suffered the largest drop in new business since April 2009 as customers tightened their belts.
“Service sector employment fell for the first time in the past six years in a sign that the slowdown is feeding through to the labour market.
“The survey results indicate that companies are becoming increasingly risk averse and eager to reduce overheads in the face of weakened customer demand and rising political uncertainty. Such worries were in turn most commonly linked to heightened Brexit anxiety, though wider global political and economic factors were also seen to have been taking their toll on demand.”
